Farmers in the South, and throughout wider New Zealand, are diversifying their operations by raising more bobby calves for beef.
Southern Rural Life understands the national kill for bobby calves was down about 30% in recent weeks.
Ferndale farmer Henry McFadzien said there was a tremendous demand for bobby calves.
More dairy farmers were keeping and rearing bobby calves themselves because the price per weaned calf made it worthwhile, he said.
''There's some very good contracts out there.''
One hundred-kilogram weaners were selling for $450 and the top calves at the same weight were selling for $500, Mr McFadzien said.
There was a big demand for surplus calves, he said.
''It's all driven by demand. Last year we saw weaner beef calves sell for $4-plus a kilogram in the autumn.''
DairyNZ Southland-South Otago regional manager Richard Kyte said there had been more breeding of specialist beef breeds and there had been more discussion among some farmers looking to change their breeding policy about this option.
''In some cases, Friesians are also being kept for meat.''
Recently, Beef and Lamb New Zealand released its latest stock survey results ending June 2016 which showed weaner cattle numbers in Otago and Southland had increased by 11% to 143,000.
''A significant proportion of these were sourced from the dairy industry,'' the report said.
In Otago and Southland, total beef cattle numbers had risen 5.1% to 400,000 head.
This was more evident in Otago, which had increased 7.2%, than Southland, which had increased 2.4%.
Older trading cattle increased in Otago, but decreased in Southland.
Beef prices have continued at comfortable levels, which encouraged farmers to continue to increase beef cattle numbers as an alternative to sheep, the report said.